XML 56 R37.htm IDEA: XBRL DOCUMENT v3.10.0.1
Retirement benefits (Tables)
12 Months Ended
Aug. 31, 2018
Retirement Benefits [Abstract]  
Schedule of defined benefit plans using fair value hierarchy
The following tables present classes of defined benefit pension plan assets by fair value hierarchy (in millions):
 
 
August 31, 2018
 
Level 1
 
Level 2
 
Level 3
Equity securities:
 
 
 
 
 
 
 
 
Equity securities1
 
$
1,030

 
$

 
$
1,030

 
$

 
 
 
 
 
 
 
 
 
Debt securities:
 
 

 
 

 
 

 
 

Fixed interest government bonds2
 
901

 

 
901

 

Index linked government bonds2
 
2,880

 

 
2,880

 

Corporate bonds3
 
2,542

 

 
2,536

 
6

 
 
 
 
 
 
 
 
 
Real estate:
 
 

 
 
 
 

 
 
Real estate4
 
501

 

 

 
501

 
 
 
 
 
 
 
 
 
Other:
 
 

 
 

 
 

 
 

Other investments5
 
822

 
64

 
531

 
227

 
 
 
 
 
 
 
 
 
Total
 
$
8,676

 
$
64

 
$
7,878

 
$
734

 
 
August 31, 2017
 
Level 1
 
Level 2
 
Level 3
Equity securities:
 
 
 
 
 
 
 
 
Equity securities1
 
$
956

 
$

 
$
956

 
$

 
 
 
 
 
 
 
 
 
Debt securities:
 
 

 
 

 
 

 
 

Fixed interest government bonds2
 
217

 

 
217

 

Index linked government bonds2
 
3,354

 

 
3,354

 

Corporate bonds3
 
3,251

 

 
3,251

 

 
 
 
 
 
 
 
 
 
Real estate:
 
 

 
 

 
 

 
 

Real estate4
 
461

 

 

 
461

 
 
 
 
 
 
 
 
 
Other:
 
 

 
 

 
 

 
 

Other investments5
 
741

 
58

 
583

 
100

 
 
 
 
 
 
 
 
 
Total
 
$
8,980

 
$
58

 
$
8,361

 
$
561

1 
Equity securities, which mainly comprise investments in commingled funds, are valued based on quoted prices and are primarily exchange-traded. Securities for which official close or last trade pricing on an active exchange is available are classified as Level 1 investments. If closing prices are not available, or the investments are in a commingled fund,
securities are valued at the last quoted bid price and typically are categorized as Level 2 investments.
2 
Debt securities: government bonds comprise fixed interest and index linked bonds issued by central governments and are valued based on quotes received from independent pricing services or from dealers who make markets in such securities. Pricing services utilize pricing which considers readily available inputs such as the yield or price of bonds of comparable quality, coupon, maturity and type, as well as dealer-supplied prices. Government bonds are classified as Level 2 investments.
3 
Debt securities: corporate bonds comprise bonds issued by corporations in both segregated and commingled funds
and are valued using recently executed transactions, or quoted market prices for similar assets and liabilities in active markets, or for identical assets and liabilities in markets that are not active. If there have been no market transactions in a particular fixed income security, its fair value is calculated by pricing models that benchmark the security against other securities with actual market prices. Corporate bonds are categorized as Level 2 investments.
4 
Real estate comprises investments in certain property funds which are valued based on the underlying properties. These properties are valued using a number of standard industry techniques such as cost, discounted cash flows, independent appraisals and market based comparable data. Real estate investments are categorized as Level 3 investments. Changes in Level 3 investments during fiscal 2018 were driven by actual return on plan assets still held at August 31, 2018 and purchases during the year.
5 
Other investments mainly comprise cash and cash equivalents, derivatives and direct private placements. Cash is categorized as a Level 1 investment and cash in commingled funds is categorized as Level 2 investments. Cash equivalents are valued using observable yield curves, discounting and interest rates and are categorized as Level 2 investments. Derivatives which are exchange-traded and for which market quotations are readily available are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market, or exchange on which they are traded, and are categorized as Level 1 investments. Over-the-counter derivatives typically are valued by independent pricing services and are categorized as Level 2 investments. Direct private placements are typically bonds valued by reference to comparable bonds and are categorized as Level 3 investments. Changes in Level 3 investments during fiscal 2018 were primarily driven by purchases during the year.
Components of net periodic benefit costs
Components of net periodic pension costs for the defined benefit pension plans (in millions):
 
 
Boots and other pension plans
 
 
2018
 
2017
 
2016
Service costs
 
$
5

 
$
5

 
$
4

Interest costs
 
193

 
174

 
308

Expected returns on plan assets/other
 
(209
)
 
(146
)
 
(249
)
Total net periodic pension (income) cost
 
$
(11
)
 
$
33

 
$
63

Accumulated and projected benefit obligations
Change in benefit obligations for the defined benefit pension plans (in millions):
 
 
2018
 
2017
Benefit obligation at beginning of year
 
$
8,880

 
$
9,463

Service costs
 
5

 
5

Interest costs
 
193

 
174

Amendments/other
 
(4
)
 
(11
)
Net actuarial gain
 
(466
)
 
(295
)
Benefits paid
 
(398
)
 
(298
)
Currency translation adjustments
 
83

 
(158
)
Benefit obligation at end of year
 
$
8,293

 
$
8,880

Changes in fair value of plan assets
Change in plan assets for the defined benefit pension plans (in millions):
 
 
2018
 
2017
Plan assets at fair value at beginning of year
 
$
8,980

 
$
9,428

Employer contributions
 
65

 
70

Benefits paid
 
(398
)
 
(298
)
Return on assets/other
 
(55
)
 
(52
)
Currency translation adjustments
 
84

 
(168
)
Plan assets at fair value at end of year
 
$
8,676

 
$
8,980

Amounts recognized in balance sheet
Amounts recognized in the Consolidated Balance Sheets (in millions):
 
 
2018
 
2017
Other non-current assets
 
$
554

 
$
278

Accrued expenses and other liabilities
 
(7
)
 
(7
)
Other non-current liabilities
 
(164
)
 
(171
)
Net asset (liability) recognized at end of year
 
$
383

 
$
100

Pre-tax amounts recognized in accumulated other comprehensive (income) loss
Cumulative pre-tax amounts recognized in accumulated other comprehensive (income) loss (in millions):
 
 
2018
 
2017
Net actuarial (gain) loss
 
$
(27
)
 
$
171

Amounts in accumulated other comprehensive income (loss) to be recognized over next fiscal year
The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for all pension plans, including accumulated benefit obligations in excess of plan assets, at August 31 were as follows (in millions):
 
 
2018
 
2017
Projected benefit obligation
 
$
8,293

 
$
8,880

Accumulated benefit obligation
 
8,285

 
8,861

Fair value of plan assets
 
8,676

 
8,980

Estimated future benefit payments
Estimated future benefit payments for the next 10 years from defined benefit pension plans to participants are as follows (in millions):
 
Estimated future
benefit payments
2019
$
396

2020
259

2021
271

2022
287

2023
302

2024-2028
1,699

Schedule of assumptions used
The assumptions used in accounting for the defined benefit pension plans were as follows:
 
 
2018
 
2017
Weighted-average assumptions used to determine benefit obligations
 
 
 
 
Discount rate
 
2.67
%
 
2.41
%
Rate of compensation increase
 
2.68
%
 
2.83
%
 
 
 
 
 
Weighted-average assumptions used to determine net periodic benefit cost
 
 

 
 

Discount rate
 
2.12
%
 
2.16
%
Expected long-term return on plan assets
 
2.27
%
 
1.69
%
Rate of compensation increase
 
2.64
%
 
2.44
%